All Forum Posts by: Daniel Lehman

@Jacob Scholes the appraiser will do a projected rents schedule and whatever you submit as projected rent - as long as they appraiser justifies that it is within reasonable range is used. Worst case you’ll need a lease agreement and deposit checks, or copies of the lease if it is already rented...

@Jacob Scholes qualification and eligibility are two different things. Eligibility is via service. You still have to qualify - but you CAN use rental income from units you don’t occupy to qualify. Banks will give you 75% of gross projected rents to supplement your income.

@Michele Zugschwerdt super smart. If you have service connected disability- even better...

Yeah, I am definitely interested in leveraging the cash into a down payment for larger assets, or more RE.  I would definitely sell them at the same time, and not pay cash, but get as much bang for the buck as possible.  Thanks man! 

I have two properties in California.  One I lived in, and one has always been a rental.  The one I lived in has been rented for the past 5 years, so I can't avoid capital gains.  I live in San Diego, and want to sell both properties, and am not sure of what to do with the proceeds.  

So - for those of you with experience.  You have 200K in equity to work with on a 1031 exchange.  What do you do?  Where do you buy?  What do you look for?  

Thanks!

I am not sure how much this has been discussed, but recently the VA passed a new bill that essentially had two impacts on the VA Home Loan Benefit. First, the funding fee amounts were increased slightly. That being said - if you have service connected disability (or a couple of other qualifiers) you have the funding fee waived entirely.

But - more relevant to this post - the ability to purchase multi-unit and use your VA to house hack just got a whole lot easier. The Loan Limit was essentially completely removed for veterans and military members with full entitlement. In other words, if you don't have your VA loan tied up in a property, and you are otherwise eligible, you can buy a property with zero down payment with basically no loan amount limitation set by the VA.

In the past, the county loan limit set the amount that you could borrow without requiring a down payment. You could buy a property that exceeded the loan limit, but you had to put a down payment equal to 25% of the overage to close. Now, you can go zero down as high as you are able to qualify for (and obviously you want to be careful and be smart about how you borrow).

So - you can buy a fourplex for a million dollars, with ZERO down payment, and can use rental income from the other three units (the ones you don't occupy) to qualify at a rate of 75% of the market rents. Even if vacant at the time of purchase.

If you have a portion of your VA tied up already, you revert back to the original calculation where you look at remaining eligibility and are required to do a 25% down payment on any overage. But, this change I think really changes the game for veterans acquiring multi-unit property and using their VA Home Loan Benefit to house hack, and get a great start to their portfolio! Thoughts?

@Nicholas Moran - yeah, absolutely.  The financing has little do do with the type of purchase.  Bank owned, foreclosure, short sale - doesn't matter how the sale is being structured because that affects the seller, not you (the buyer).  

That being said - AUCTIONS are tough sometimes because they typically want cash. But you can get a partner, buy cash and then refinance VA if you wanted to. The only other thing to consider is condition. If the property has any health or safety hazards, VA will require that you fix them before moving in. Typically chipped and peeling paint (lead hazard), anything problematic that could put the buyer at risk - that kind of thing.

So there are things to consider, BUT - the type of sale itself is not limited.  One other thing - just because it is a short sale doesn't mean that you are getting a better deal.  Just because a person owes more than the property is worth, doesn't mean the bank is going to give the property away.  That happened in the crash because EVERYONE was short selling and banks were losing their butts.  But in a typical market, a short sale is still a sale at market value, generally, the seller just has to get approval from the bank to take a loss. 

Make sense?  Here if you need anything else or have any other questions. 

D

@Chris Mooney I wrote a book called "the VA Home Loan Field Manual. I'm not an author, but I think it's well written and the information is good. Just google it or check it out on Amazon if you want...

Daniel 

@Albert Bui - on point man.  

@Kevin McGevna - if you are going to partner, you are going to have to figure out how you add value to the deal without being on the loan. Because unless you are a veteran, or a spouse of a veteran (depending on how committed to this deal you are... haha...) you can't go on a VA loan unless you are eligible. You CAN go on title - you just want to either put it into an entity after the fact, or close and then do a quitclaim deed.

Outside of that - your question is super broad.  But I would advise this:  Start with the goal.  Without a goal you are basically pulling tools out of the toolbox without a gameplan.  You're likely to end up with a saw in your hand standing in front of a lightbulb that needs to be changed.  Don't pre-emptively make decisions on financing until you know what the preferred out come is.  

A lot of times people will come into my office and say "hey - I want to do an FHA loan" but they really don't know why. Most times it doesnt make the most sense, but with a clear picture of the goal, you can work backwards and structure the right financing...

VA is great if you can use it. If you have any questions about it, I'm here to help out in any way that I can.

Daniel Lehman
USMC Veteran